Issue - meetings
Draft Budget 2025 – 2026, Version One
Meeting: 11/12/2024 - Executive (Item 268)
268 Draft Budget 2025 – 2026, Version One 
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Purpose:
This report provides an update on the developing budget for 2025/26.
Recommendation:
That the Executive resolves to:
1. Note the update on the developing budget for 2025/26.
Additional documents:
Minutes:
The Executive Member for Finance introduced the report that provided an update on the developing budget for 2025/26
This was the first draft of the budget and it for the purposes of the report had assumed that there would be no fundamental changes in government funding in 2025/26, following the recent Budget announcement by the new Government. The official settlement announcement, however; was expected in late December 2024. The focussed work had been done on the revenue part of the budget i.e. the cost of providing services, with the funding element left largely as it was for now.
In-year reporting, at Quarter 2 was forecasting an overspend this financial year of £85,686 compared to the approved budget which anticipated a contribution of £5,107 to General Fund Reserves. The key factors driving this revenue position were income shortfalls in garden waste and development management, the delayed Elmfield office letting, the empty Carterton Industrial Estate units and increased expenditure on waste and recycling container replacement.
The draft budget for next year being a small surplus after growth assumptions at this initial stage, was encouraging, but the picture from 2026/27 onwards was less optimistic with an unsustainable reliance on the use of reserves to fund front line services. While the reserves position for the Council was currently relatively healthy, there remained a financial gap from the estimated impact of changes to Local Government Financing (i.e. the long delayed reform of the Retained Business Rates system) and the end of the current leisure contract in 2027 which unless resolved would exhaust reserves over the life of this MTFS.
Local Government Finance reform, also known as the Fairer Funding Review, was supposed to ensure a fairer formula for the allocation of funding to Local Authorities. Originally due to be implemented from April 2020, reform of the Business Rates system, which was estimated to reduce the Council’s Retained Business Rates by 45% or circa £2m, had been pushed back until at least April 2026. The New Homes Bonus was also due to end in 2025/26 after originally being scheduled to end in 2022/23.
Phase 2 of the Publica transition had added a significant element of uncertainty around the financial impact of returning the next tranche of services back to the Council in terms of both one off and ongoing costs. One off costs would be funded from earmarked reserves in 2025/26 and ongoing costs would be included in the 2026/27 base budget.
The use of reserves to manage short term fluctuations in the Council’s financial position was necessary but could not be sustained over the longer term as reserves could only be spent once.
Councillor Alaric Smith proposed that the Executive agree the recommendations as listed on the report. This was seconded by Andy Graham was put to a vote, and
was unanimously agreed by the Executive.
Cllr Graham stated that they are willing to invest in people, in better positions than most, other councils in different position.
The Executive resolved to:
1. Note the update ... view the full minutes text for item 268